Correlation Between NYSE Composite and Franklin California
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Franklin California at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NYSE Composite and Franklin California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Franklin California Intermediate Term, you can compare the effects of market volatilities on NYSE Composite and Franklin California and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NYSE Composite with a short position of Franklin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Franklin California.
Diversification Opportunities for NYSE Composite and Franklin California
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Franklin is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Franklin California Intermedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California and NYSE Composite is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NYSE Composite are associated (or correlated) with Franklin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin California has no effect on the direction of NYSE Composite i.e., NYSE Composite and Franklin California go up and down completely randomly.
Pair Corralation between NYSE Composite and Franklin California
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.72 times more return on investment than Franklin California. However, NYSE Composite is 2.72 times more volatile than Franklin California Intermediate Term. It trades about 0.43 of its potential returns per unit of risk. Franklin California Intermediate Term is currently generating about 0.14 per unit of risk. If you would invest 1,924,339 in NYSE Composite on September 3, 2024 and sell it today you would earn a total of 102,865 from holding NYSE Composite or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Franklin California Intermedia
Performance |
| Timeline |
NYSE Composite and Franklin California Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Franklin California Intermediate Term
Pair trading matchups for Franklin California
Pair Trading with NYSE Composite and Franklin California
The main advantage of trading using opposite NYSE Composite and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Franklin California can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Franklin California will offset losses from the drop in Franklin California's long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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